McGinnis v. Union Pacific R. Co.
| Decision Date | 16 March 2009 |
| Docket Number | Civil Action No. 3:07-CV-32. |
| Citation | 612 F.Supp.2d 776 |
| Parties | Christopher McGINNIS, Individually, and by Next Friend, Buffy McGinnis, Plaintiffs, v. UNION PACIFIC RAILROAD CO., Defendant and Third-Party Plaintiff, Metropolitan Transit Authority of Harris County, Texas, Intervenor v. Liberty Mutual Fire Insurance Company and Those Certain Individual Underwriters of Lloyd's London, Forming Syndicate 1861 and Syndicate 2003 Subscribing Severally to Policy Number 576/UF7273700 for the 2003 Lloyd's Year of Account, Third-Party Defendants. |
| Court | U.S. District Court — Southern District of Texas |
George William Gore, Attorney at Law, Houston, TX, for Plaintiffs.
John L. Hagan, Jones Day, Benton R. Bond, Houston, TX, for Defendant and Third-Party Plaintiff.
Michael Phillips, Phillips Akers PC, John Martin Ribarits, Preis Roy, Houston, TX, Jennifer E. Michel, Preis & Roy, Lafayette, LA, for Third-Party Defendants.
Bryan S. Dumesnil, William G. Hagans, Bracewell Giuliani LLP, Houston, TX, for Intervenor.
Before the Court are the Motions for Summary Judgment of Third-Party Defendants Liberty Mutual Fire Insurance Company ("Liberty Mutual") (Docket Entry ("Doc.") No. 64) and Underwriters of Lloyd's, London ("Lloyd's") (Doc. No. 66), and all objections, responses and replies thereto (respectively, Doc. Nos. 74, 76, 84 & 85; Doc. Nos. 76, 81, 87, 88 & 90). Also before the Court are the Partial Motions for Summary Judgment of Third-Party Plaintiff Union Pacific Railroad Company ("UP") (Doc. Nos. 67 & 69) and Intervenor Metropolitan Transit Authority ("Metro") (Doc. No. 65), and all objections, responses and replies thereto (respectively, Doc. Nos. 71, 77, 89 & 91; Doc. Nos. 70, 78, 86).
After reviewing the Motions, all related filings, and the relevant law, the Court finds, for the reasons discussed below, that Liberty Mutual's Motion for Summary Judgment should be granted in part and denied in part, that Lloyd's Motion for Summary Judgment should be denied, that UP's Motions for Partial Summary Judgment of UP should be granted in part and denied in part, and that Metro's Motion for Partial Summary Judgment should be granted in part and denied in part.
In 2001, Metro began construction of a light rail transportation system in Houston, Texas. The initial phase of the light rail project included the construction of a 7.5 mile light rail system with 16 stations, downtown street improvements, a Transit Administration building, Park and Ride lots, a test track, a rail operations building, and the design, manufacture, assembly, testing and acceptance of 18 light rail vehicles ("LRVs"). Metro obtained seven major contracts for the construction of the light rail system. One of Metro's contracts for construction was with Siemens Transportation Systems ("Siemens"), the Vehicle and Systems Contractor. Metro's contract with Siemens was on a "ready to go" turnkey basis, which meant that Siemens was responsible for virtually all aspects of the light rail project related to the vehicles and systems, including the track, the LRVs, fare collection, catenary, substations, signaling, and communications. In particular, the "ready to go" contract made Siemens responsible for the installation of the 18 LRVs, which each required separate testing before Metro would take final acceptance for their use in its light rail transportation system. This testing or "burning-in" process, also referred to as commissioning, necessitated Siemens' use of a suitable test track. Siemens was also required to provide Metro employees with operator training and to supervise the LRVs.
In order to facilitate the installation or testing by Siemens of Metro's new fleet of LRVs, Metro entered into negotiations with Union Pacific ("UP") for a five year lease agreement to construct, maintain, and operate a test track on UP's land. Because the premises Metro sought to lease for its light rail project were located in close proximity to a railroad right-ofway owned by UP, on which it operated two active rail lines, there was an increased risk that accidents might arise from Siemens' use of the property. Due to the increased risk, Metro and UP agreed to incorporate two important requirements into the lease agreement to protect UP. First, pursuant to the terms of the lease agreement, Metro was required to purchase specified insurance to protect UP from the increased risk. The agreement provides:
[Metro] shall, at its sole costs and expense, procure and maintain during the life of this Agreement the following insurance coverage:
A. Commercial General Liability insurance. This insurance shall contain broad form contractual liability with a single limit of at least $5,000,000 each occurrence or claim and an aggregate limit of at least $10,000,000. Coverage must be purchased on a post 1998 ISO or equivalent form.
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B. Railroad Protective Liability insurance naming only [UP] as the insured with a combined single limit of $2,000,000 per occurrence with a $6,000,000 aggregate
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(Doc. No. 55, Ex. A-4 at Bates 1590-91.)
Metro separately agreed to release and indemnify UP for losses as follows:
[Metro], to the extent it may lawfully do so, waives and releases any and all claims against [UP] for, and agrees to indemnify, defend and hold harmless [UP], its affiliates, and its and their officers, agents and employees ("Indemnified Parties") from and against, any loss, damage (including without limitation, punitive or consequential damages), injury, liability, claim, demand, cost or expense (including, without limitation, attorneys' fees and court costs), fine or penalty (collectively, "Loss") incurred by any person (including, without limitation, [UP], [Metro], or any employee of [UP] or [Metro]) and arising from or related to (i) any use of the Premises by [Metro] or any invitee or licensee or [Metro], (ii) any act or omission of [Metro], its officers, agents, employees, licensees or invitees, or (iii) any breach of this Lease by [Metro].
(Id. at Bates 1587.) The agreement limited the indemnity to situations where UP was not solely negligent. (Id.)
C. The Insurance Policies
To secure insurance coverage for the light rail transportation system, Metro retained the services of Willis of Texas, an insurance broker. With the assistance of Willis of Texas, Metro purchased a Railroad Protective Liability policy ("RPL"), a Wrap-Up policy, and an Umbrella or Excess policy. First, with regard to the RPL, in exchange for Metro's payment of a $29,760 advance premium, which was based on a contract cost of $30,000,000, Liberty Mutual issued RPL policy number TE2-691-004173-031. The RPL listed "Union Pacific Railroad Company" as the Named Insured and "Metropolitan Transit Authority of Harris County" as the "Designated Contractor." The policy provided liability limits in the amount of $2,000,000 per occurrence, or an aggregate limit of $4,000,000. The effective dates of coverage under the RPL were from March 14, 2001 to September 14, 2004. (Id.)
Liberty Mutual also issued Wrap-Up policy number RG2-691-004173-011, in which "Metropolitan Transit Authority of Harris County" was listed as the Named Insured. (Doc. No. 64, Ex. B.) The Wrap-Up policy, consisting of three layers, included an Owner Controlled Consolidated Insurance Program ("OCCIP"), a General Amendatory Endorsement ("GAE"), and a Commercial General Liability Insurance ("CGL") policy. (Id.) The policy provided a limit of liability for personal injury and property damage to $2,000,000 per occurrence, a general aggregate limit (other than Products-Completed Operations) of $4,000,000, and a Products-Completed Operations Aggregate Limit of $4,000,000. (Id.) The effective dates for coverage under this policy were from March 14, 2001 to September 14, 2001.
In addition, Lloyd's issued Commercial Umbrella or Excess policy number 576/UF72727000, with effective dates of coverage from March 14, 2001 to September 14, 2004. (Doc. No. 65, Ex. B.) The "Schedule" listed "the Assured" as "The Metropolitan Transit Authority of Harris County, Texas (Metro) and others, all as more fully set forth in the attached Policy Wording." The Declarations listed the "Named Insured" as "THE METROPOLITAN TRANSIT AUTHORITY OF HARRIS COUNTY, TEXAS (METRO), Contractors, Subcontractors of any tier and Consultants and Sub-Consultants of any tier, for whom any afore-mentioned Insureds have agreed by contract to furnish the insurance coverage provided under this policy per the project." (Id.) As set forth in the Declarations page, the Umbrella policy provided limits of $50,000,000 per occurrence, $50,000,000 General Aggregate (in accordance with Section III, Limits of Insurance), and $50,000,000 Products-Completed Operations Aggregate for the period (otherwise in accordance with Section III, Limits of Insurance). The Declarations page also provided that there was a $25,000 "Self Insured Retention (inclusive of Defense Costs)." (Id.)
D. The Accident, Subsequent' Claims & Settlements
On January 23, 2004, Christopher McGinnis, a UP worker, was operating one of UP's Hyrail vehicles. He was traveling to a work site on the railroad tracks. As he waited behind another Hyrail vehicle that had already crossed the LRV test track and had maneuvered onto the rail road tracks, another UP employee manually lifted the crossing arm so that McGinnis could also cross the test track and maneuver his...
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